Giving it the Gas
February 20, 2021
I recently tried to deploy a simple “Hello world” dapp on all the testnets. When I got to the Mainnet a deployment would cost roughly $76 in gas fees to complete. Nine lines of code; I decided the testnets were enough. Blockchain “gas” fees are literally the fuel behind the Ethereum blockchain. Ethereum is behind every crypto coin you can think of that’s not Bitcoin. If you invest in it…great. If you program blockchains with it…damn! Just a couple of years ago you could deploy the exact same contract for pennes. Those of you in the business know what I’m talking about. It could be dismaying if it didn’t actually make sense. The block chain is a real boon to economics because for the first time in all of history, we can examine pure mathematical models sans the most corrupting factor in all purely mathematical models…human nature.
Yep. That’s always been a tough one. In any economic system to date has always found weaknesses when things like greed, selfishness and downright meanness, come into play …as they do from time to time. Models aren’t perfect because people aren’t perfect. And although blockchains aren’t perfect either…they do enjoy one liberating factor…none of those pesky human emotions to create and justify slanted points of view. Keeping it simple, economics always starts with a market system, preferably a free market but a free market is akin to a free lunch. More on that later. For now based on the first axiom that a fair price for any item on that market will be based on Supply and Demand. That’s all you need. Price represents value, the value placed upon it by the marketplace. Remember “it” can be just about anything but in this case it is Ethereum.
Value is determined by agreement. Agreements are based upon trust. It is the trust that creates the value. When someone trusts something, they use it. When more people use it, more people trust it, the more people trust it the more valuable it becomes…and on and on and on. Usually this kind of logic would be used to explain the boom and bust cycles of the fiat financial system. But those systems are laden with the human factor and all its weaknesses. Buyers get skittish, sell shares, run on banks..etc. All those horrible things fiat systems try desperately to avoid. Ethereum has nothing to do with any of that and could care less. Humans worry and fret and need to buy their own shares to drive up the share price. Market forces are only as good as the will of the people comprising that market. The only “pure” market therefore is a market without people.
That may sound inhumane, but actually, it’s not. It’s a good thing in my opinion. Along with the absence of people there is an absence of doubt. The blockchain is based on its own immutable data. It’s as certain as anything made by man can be… at least for now. I’m sure pretty much everyone on the planet has heard about the price of Bitcoin and Ethereum reaching all time highs practically every day. Sure the bubble must burst somewhere along the line and we’re back to square one..right? Well not necessarily. In a system based upon certainty there is absolutely no doubt, that allows infinite room for trust, that is, absolute trust. If you have infinite trust, you have the possibility of infinite use. Infinite use means infinite VALUE. In other words doesn’t it make sense that trust could be, perhaps, should be, the most valuable thing on Earth? Makes sense to me…